Exhibit 10.2
IT STAFFING LTD.
1998 STOCK OPTION PLAN
I. Purpose of the Plan
The IT STAFFING LTD. 1998 STOCK OPTION PLAN (the "Plan") is intended
to provide a means whereby certain employees of IT STAFFING LTD., an Ontario
corporation (the "Company"), and its affiliates may develop a sense of
proprietorship and personal involvement in the development and financial
success of the Company, and to encourage them to remain with and devote their
best efforts to the business of the Company, thereby advancing the interests
of the Company and its shareholders. Accordingly, the Company may grant to
certain service providers ("Optionees") the option ("Option") to purchase
common shares of the Company ("Shares"), as hereinafter set forth.
Options granted under the Plan may be either incentive stock options,
within the meaning of section 422(b) of the Internal Revenue Code of 1986, as
amended (the "Code") ("Incentive Stock Options"), or options which do not
constitute Incentive Stock Options.
II. Administration
(a) The Plan shall be administered by a committee (the "Committee")
of, and appointed by, the Board of Directors of the Company (the "Board"), and
the Committee shall be (a) comprised solely of two or more outside directors
(within the meaning of section 162(m) of the Code and applicable interpretive
authority thereunder), and (b) constituted so as to permit the Plan to comply
with Rule 16b-3, as currently in effect or as hereinafter modified or amended
("Rule 16b-3"), promulgated under the United States Securities Exchange Act of
1934, as amended (the "1934 Act"). The Committee shall have sole authority to
select the Optionees from among those individuals eligible hereunder and to
establish the number of shares which may be issued under each Option. The
limitation set forth in the preceding sentence shall be applied in a manner
which will permit compensation generated under the Plan to constitute
"performance-based" compensation for purposes of section 162(m) of the Code,
including, without limitation, counting against such maximum number of shares,
to the extent required under section 162(m) of the Code and applicable
interpretive authority thereunder, any shares subject to Options that are
cancelled or repriced. In selecting the Optionees from among individuals
eligible hereunder and in establishing the number of shares that may be issued
under each Option, the Committee may take into account the nature of the
services rendered by such individuals, their present and potential
contributions to the Company's success and such other factors as the Committee
in its discretion shall deem relevant.
(b) The Committee is authorized to interpret the Plan and may from
time to time adopt such rules and regulations, consistent with the provisions
of the Plan, as it may deem advisable to carry out the Plan. All decisions made
by the Committee in selecting the Optionees, in establishing the number of
shares which may be issued under each Option and in construing the provisions
of the Plan shall be final.
(c) The provisions of the Plan shall be interpreted and construed in
accordance with the laws of the Province of Ontario.
III. Option Agreements
(a) Each Option shall be evidenced by a written agreement between the
Company and the Optionee ("Option Agreement") which shall contain such terms
and conditions as may be approved by the Committee. The terms and conditions of
the respective Option Agreements need not be identical. Specifically, an Option
Agreement may provide for the surrender of the right to purchase shares under
the Option in return for a payment in cash or Shares or a combination of cash
and Shares equal in value to the excess of the fair market value of the shares
with respect to which the right to purchase is surrendered over the option
price therefor ("Stock Appreciation Rights"), on such terms and conditions as
the Committee in its sole discretion may prescribe; provided that, except as
provided in subparagraph VIII(c) hereof, the Committee shall retain final
authority (i) to determine whether an Optionee shall be permitted, or (ii) to
approve an election by an Optionee, to receive cash in full or partial
settlement of Stock Appreciation Rights. Moreover, an Option Agreement may
provide for the payment of the option price, in whole or in part, by the
delivery of a number of Shares (plus cash if necessary) having a fair market
value equal to such option price.
(b) For all purposes under the Plan, the fair market value of a Share
on a particular date shall be equal to the mean of the high and low sales
prices of the Shares (i) reported by the SmallCap Market of NASDAQ on that
date or (ii) if the Shares are listed or quoted on a national stock exchange
or quotation system, reported on the stock exchange composite tape on that
date; or, in either case, if no prices are reported on that date, on the last
preceding date on which such prices of the Shares are so reported. If the
Shares are traded over the counter at the time a determination of its fair
market value is required to be made hereunder, its fair market value shall be
deemed to be equal to the average between the reported high and low or closing
bid and asked prices of the Shares on the most recent date on which the Shares
were publicly traded. In the event the Shares are not publicly traded at the
time a determination of its value is required to be made hereunder, the
determination of its fair market value shall be made by the Committee in such
manner as it deems appropriate.
(c) Each Option and all rights granted thereunder shall not be
transferable and shall be exercisable during the Optionee's lifetime only by
the Optionee or the Optionee's guardian or legal representative.
(d) The Committee shall have the discretion to determine a vesting
schedule for any Option granted under the Plan. Unless otherwise determined by
the Committee, Options granted under the Plan shall not vest and be exercisable
prior to the day following the second anniversary of the date on which the
Options concerned are granted.
(e) The expiry date of an Option (the "Expiry Date") shall be the
earlier of the date fixed by the Committee, as set forth in the individual
Option Agreement, and the date established, if
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applicable, in clauses (i) to (iii) below, provided that such date shall not be
later than the tenth anniversary of the date on which the Option is granted.
(i) If an Optionee ceases affiliation with the Company or an affiliate by
reason of death, permanent disability or retirement at or after age 65,
the Expiry Date shall be the first anniversary of the occurrence.
(ii) If an Optionee ceases affiliation with the Company or an affiliate for
any other reason (other than termination of his or her employment or
other service for cause), the Expiry Date shall be the date that is 90
days following the occurrence.
(iii) If an Optionee ceases affiliation with the Company or an affiliate upon
the termination of his or her employment or other service for cause,
then the Expiry Date shall be the date on which the Company or its
affiliate gives notice to the Optionee of his or her termination.
IV. Eligibility of Optionee
(a) Options may be granted only to individuals who are employees
(including officers and directors who are also employees) of the Company or any
parent or subsidiary corporation (as defined in section 424 of the Code) of the
Company at the time the Option is granted; provided, however, that Options which
do not constitute Incentive Stock Options may be granted to individuals who are
directors (but not also employees) of the Company or any such parent or
subsidiary corporation. Subject to required regulatory approvals, Options may
also be granted to consultants, advisors and similar parties who provide their
skills and expertise to the Company or its affiliates. Options may be granted to
the same individual on more than one occasion.
(b) No Incentive Stock Option shall be granted to an individual if, at
the time the Option is granted, such individual owns shares possessing more than
10% of the total combined voting power of all classes of capital stock of the
Company or of its parent or subsidiary corporation, within the meaning of
section 422(b)(6) of the Code, unless (i) at the time such Option is granted the
option price is at least 110% of the fair market value of the Shares subject to
the Option and (ii) such Option by its terms is not exercisable after the
expiration of five years from the date of grant. To the extent that the
aggregate fair market value (determined at the time the respective Incentive
Stock Option is granted) of shares with respect to which Incentive Stock Options
are exercisable for the first time by an individual during any calendar year
under all incentive stock option plans of the Company and its parent and
subsidiary corporations exceeds US$100,000, such excess Incentive Stock Options
shall be treated as Options which do not constitute Incentive Stock Options. The
Committee shall determine, in accordance with applicable provisions of the Code,
Treasury Regulations and other administrative pronouncements, which of an
Optionee's Incentive Stock Options will not constitute Incentive Stock Options
because of such limitation and shall notify the Optionee of such determination
as soon as practicable after such determination.
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(c) The aggregate number of Shares reserved for issuance pursuant to
Options granted to any one Optionee shall not exceed 5% of the number of Shares
outstanding (on a non-diluted basis) at the time of such grant.
V. Shares Subject to the Plan
(a) The aggregate number of shares which may be issued under Options
granted under the Plan shall not exceed 435,000 Shares. Such shares may consist
of authorized but unissued Shares or previously issued Shares reacquired by the
Company. Any of such shares which remain unissued and which are not subject to
outstanding Options at the termination of the Plan shall cease to be subject to
the Plan but, until termination of the Plan, the Company shall at all times make
available a sufficient number of shares to meet the requirements of the Plan.
Should any Option hereunder expire or terminate prior to its exercise in full,
the shares theretofore subject to such Option may again be subject to an Option
granted under the Plan to the extent permitted under Rule 16b-3 and applicable
Canadian securities legislation.
(b) The aggregate number of shares which may be issued under the Plan
shall be subject to adjustment in the same manner as provided in Paragraph VIII
hereof with respect to Shares subject to Options then outstanding. Exercise of
an Option in any manner, including an exercise involving a Stock Appreciation
Right, shall result in a decrease in the number of Shares which may thereafter
be available, both for purposes of the Plan and for sale to any one individual,
by the number of shares as to which the Option is exercised. Separate share
certificates shall be issued by the Company for those shares acquired pursuant
to the exercise of an Incentive Stock Option and for those shares acquired
pursuant to the exercise of any Option which does not constitute an Incentive
Stock Option.
VI. Option Price
The purchase price of Shares issued under each Option shall be
determined by the Committee, but in no case shall such purchase price be less
than the fair market value of the Shares subject to the Option on the date the
Option is granted.
VII. Term of Plan
The Plan, shall be effective upon the date of its adoption by the
Board, provided the Plan is approved by the shareholders of the Company
within twelve months thereafter. Notwithstanding any provision in this Plan
or in any Option Agreement, no Option shall be exercisable prior to such
shareholder approval. Except with respect to Options then outstanding, if not
sooner terminated under the provisions of paragraph IX, the Plan shall
terminate upon and no further Options shall be granted after the expiration
of ten years from the date of its adoption by the Board.
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VIII. Recapitalization or Reorganization
(a) The existence of the Plan and the Options granted hereunder shall
not affect in any way the right or power of the Board or the shareholders of the
Company to make or authorize any adjustment, recapitalization, reorganization or
other change in the Company's capital structure or its business, any merger or
consolidation of the Company, any issue of debt or equity securities, the
dissolution or liquidation of the Company or any sale, lease, exchange or other
disposition of all or any part of its assets or business or any other corporate
act or proceeding.
(b) The shares with respect to which Options may be granted are Shares
as presently constituted, but, if and whenever, prior to the expiration of an
Option theretofore granted, the Company shall effect a subdivision or
consolidation of Shares or the payment of a stock dividend on Shares without
receipt of consideration by the Company, the number of Shares with respect to
which such Option may thereafter be exercised (i) in the event of an increase in
the number of outstanding shares shall be proportionately increased, and the
purchase price per share shall be proportionately reduced, and (ii) in the event
of a reduction in the number of outstanding shares shall be proportionately
reduced, and the purchase price per share shall be proportionately increased.
(c) If the Company recapitalizes, reclassifies its capital stock, or
otherwise changes its capital structure ( a "recapitalization"), the number and
class of Shares covered by an Option theretofore granted shall be adjusted so
that such Option shall thereafter cover the number and class of shares of stock
and securities to which the Optionee would have been entitled pursuant to the
terms of the recapitalization if, immediately prior to the recapitalization, the
Optionee had been the holder of record of the number of Shares then covered by
such Option. If:
(i) the Company shall not be the surviving entity in any merger,
consolidation or other reorganization (or survives only as a subsidiary
of an entity);
(ii) the Company sells, leases or exchanges all or substantially all of its
assets to any other person or entity;
(iii) the Company is to be dissolved and liquidated;
(iv) any person or entity, including a "group" as contemplated by Section
13(d)(3) of the 1934 Act, acquires or gains ownership or control
(including, without limitation, power to vote) of more than 50% of the
outstanding shares of the Company's voting stock (based upon voting
power); or
(v) as a result of or in connection with a contested election of directors,
the persons who were directors of the Company before such election
shall cease to constitute a majority of the Board (each such event is
referred to herein as a "Corporate Change");
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no later than (a) ten days after the approval by the shareholders of the Company
of such merger, consolidation, reorganization, sale, lease or exchange of assets
or dissolution or such election of directors or (b) thirty days after a change
of control of the type described in clause (iv), the Committee, acting in its
sole discretion without the consent or approval of any Optionee, shall act to
effect one or more of the following alternatives, which may vary among
individual Optionees and which may vary among Options held by any individual
Optionee:
(1) accelerate the time at which Options then outstanding may be exercised
so that such Options may be exercised in full for a limited period of
time on or before a specified date (before or after such Corporate
Change) fixed by the Committee, after which specified date all
unexercised Options and all rights of Optionees thereunder shall
terminate;
(2) require the mandatory surrender to the Company by selected Optionees of
some or all of the outstanding Options held by such Optionees
(irrespective of whether such Options are then exercisable under the
provisions of the Plan) as of a date before or after such Corporate
Change, specified by the Committee, in which event the Committee shall
thereupon cancel such Options and the Company shall pay to each
Optionee an amount of cash per share equal to the excess, if any, of
the amount calculated in subparagraph (d) below (the "Change of Control
Value") of the shares subject to such Option over the exercise price(s)
under such Options for such shares;
(3) make such adjustments to Options then outstanding as the Committee
deems appropriate to reflect such Corporate Change (provided, however,
that the Committee may determine in its sole discretion that no
adjustment is necessary to Options then outstanding); or
(4) provide that the number and class of shares covered by an Option
theretofore granted shall be adjusted so that such Option shall
thereafter cover the number and class of shares or other securities or
property (including, without limitation, cash) to which the Optionee
would have been entitled pursuant to the terms of the agreement of
merger, consolidation or sale of assets and dissolution if, immediately
prior to such merger, consolidation or sale of assets, and dissolution,
the Optionee had been the holder of record of the number of Shares then
covered by such Option.
(d) For the purposes of clause (2) in subparagraph (c) above, the
"Change of Control Value" shall equal the amount determined in clause (i), (ii)
or (iii), whichever is applicable, as follows:
(i) the per share price offered to shareholders of the Company in any such
merger, consolidation, reorganization, sale of assets or dissolution
transaction;
(ii) the price per share offered to shareholders of the Company in any
tender offer or exchange offer whereby a Corporate Change takes place;
or
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(iii) if such Corporate Change occurs other than pursuant to a tender or
exchange offer, the fair market value per share of the shares into
which such Options being surrendered are exercisable, as determined by
the Committee as of the date determined by the Committee to be the date
of cancellation and surrender of such Options.
In the event that the consideration offered to shareholders of the Company in
any transaction described in this subparagraph (d) or in subparagraph (c) above
consists of anything other than cash, the Committee shall determine the fair
cash equivalent of the portion of the consideration offered which is other than
cash.
(e) Any adjustment provided for in subparagraphs (b) or (c) above shall
be subject to any required shareholder action.
(f) Except as hereinbefore expressly provided, the issuance by the
Company of shares of any class or securities convertible into shares of any
class, for cash, property, labor or services, upon direct sale, upon the
exercise of rights or warrants to subscribe therefor, or upon conversion of
shares or obligations of the Company convertible into such shares or other
securities, and in any case whether or not for fair value, shall not affect, and
no adjustment by reason thereof shall be made with respect to, the number of
Shares subject to Options theretofore granted or the purchase price per share.
IX. Amendment or Termination of the Plan
The Board in its discretion may terminate the Plan at any time with
respect to any shares for which Options have not theretofore been granted. The
Board shall have the right to alter or amend the Plan or any part thereof from
time to time, provided that no change in any Option theretofore granted may be
made which would impair the rights of the Optionee without the consent of such
Optionee, and provided further that the Board may not make any alteration or
amendment which would increase the aggregate number of shares which may be
issued pursuant to the provisions of the Plan or change the class of individuals
eligible to receive Options under the Plan without the approval of the
shareholders of the Company.
X. Securities Laws
(a) The issue of Shares by the Company pursuant to the exercise of an
Option is subject to this Plan and compliance with the laws, rules and
regulations of all regulatory bodies applicable to the issuance and distribution
of the Company's securities and to the listing requirements of any stock
exchange or market on which the Shares may then be listed or quoted. The Company
shall not be obligated to issue any Shares pursuant to any Option granted under
the Plan at any time when the offering of the Shares covered by such Option has
not been registered under the United States Securities Act of 1933 or otherwise
qualified for distribution under such other U.S. state and federal and Canadian
provincial laws, rules or regulations as the Company or the Committee deems
applicable and, in the opinion of legal counsel for the Company, there is no
exemption from
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applicable prospectus and registration requirements of such laws, rules or
regulations available for the offering and sale of such shares.
(b) It is intended that the Plan and any grant of an Option made to a
person subject to Section 16 of the 1934 Act meet all of the requirements of
Rule 16b-3 thereunder. If any provision of the Plan or any such Option would
disqualify the Plan or such Option under, or would otherwise not comply with,
Rule 16b-3, such provision or Option shall be construed or deemed amended to
conform to Rule 16b-3.
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Additional Plan Provisions, if required:
In addition, until such time as the Plan has been approved by
a majority of the votes cast at a meeting of shareholders (other than votes
attaching to securities beneficially owned by (A) an insider (within the meaning
of the Securities Act (Ontario)) of the Company, other than a person who falls
within that definition solely by virtue of being a director or senior officer of
a subsidiary of the Company, and (B) an associate (within the meaning of the
Securities Act (Ontario)) of any person who is an insider by virtue of (A) above
(such persons herein referred to as "Insiders"):
(i) the number of Shares reserved for issuance pursuant to Options granted
to Insiders shall not exceed 10% of the number of Shares outstanding at
the time of the grant (on a non-diluted basis), less the aggregate
number of Shares reserved for issuance under any other stock option,
stock option plan, employee stock purchase plan or any other
compensation or incentive mechanism involving the issuance or potential
issuance of Shares to one or more service providers, including a share
purchase from treasury that is financially assisted by the Company by
way of loan, guarantee or otherwise (a "Share Compensation
Arrangement") over the preceding one-year period;
(ii) the issuance to any one Insider and such Insider's Associates, within a
one-year period, of Shares on the exercise of Options may not exceed 5%
of the number of Shares outstanding at the time of the grant (on a
non-diluted basis), less the aggregate number of Shares reserved for
issuance under any other Share Compensation Arrangement over the
preceding one-year period; and
(iii) the issuance to all Insiders, within a one-year period, of Shares on
the exercise of Options, may not exceed 10% of the number of Shares
outstanding at the time of the grant (on a non-diluted basis) less the
aggregate number of Shares reserved for issuance under any other Share
Compensation Arrangement over the preceding one-year period.
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